South Dakota’s tourism tax becomes permanent

With overwhelming bipartisan support, the state will make permanent a 0.5 percent surtax on tourism goods purchased during the summer months, the height of South Dakota’s tourism season.

The tourism tax, currently 1.5 percent, was scheduled to lower to 1 percent without legislative action.

On Friday, the state Senate heard from business owners and tourism officials who testified in favor of the tax, “arguing the cost of the tax was more than outweighed in the benefits it brought to the state,” Argus Leader reported.

In a unanimous vote, the Senate state affairs committee voted to make the 1.5 percent tax rate permanent Friday. While the vote was unanimous, enthusiasm varied among senators.

“I can’t tell you how much I support this initiative,” said Sen. Mark Johnston, a Republican of Sioux Falls.

But Sen. Tim Rave, a Republican from Baltic, was more skeptical prior to the vote.

“Is tourism more important than health care, or is it more important than schools?” he asked.

The bill is expected to soon be signed into law by the governor, Dennis Daugaard, who supports making the tax permanent.

According to the D.C.-based Tax Foundation, South Dakota has the second most business-friendly tax code, largely based on the absence of a state corporate or individual income tax.

“The lesson is simple,” says the Tax Foundation. “A state that raises sufficient revenue without one of the major taxes will, all things being equal, have an advantage over those states that levy every tax in the state tax collector’s arsenal.”

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